Extra Pay for Pollution?

Pay packages for expats often include extra cash for employee housing, private schools and security. Next up: Extra money for air pollution?

Coca-Cola Co. now offers environmental hardship pay for employees who have relocated to China, where smog has reached harmful levels in several cities, the company said this week.

A spokesperson for the Atlanta-based beverage giant declined to confirm the value of the wage premium or how many employees are eligible for the benefit. The Australian Financial Review reported the allowance to be around 15% of an employee’s base salary.

It is not uncommon for multinational companies to provide hardship allowances to incentivize employees to work in China, in part because of the heavy levels of smog, said Ed Hannibal, global leader of the mobility practice at HR consulting firm Mercer LLC. He said the value of hardship pay will depend on where the office is located, as some cities have higher levels of pollution than others.

“They will provide that as a compensation tool in order to offset the severe living conditions and to keep people on the ground,” Hannibal said. Many companies also pay for air or water purification systems to be installed the homes of China-based employees, he said.

Panasonic Corp., the Japan-based electronics maker, offers a “lifestyle differential allowance” that compensates for several factors that impact quality of life, including air pollution, a spokesman said.

Exposure to smog has been linked to respiratory problems such as asthma and emphysema. The U.S. Embassy in Beijing alerts American expatriates in China when air-pollution levels reach dangerously high levels and provides an air quality monitor for several cities on its website.

This week, the Air Quality Index for Beijing registered unhealthy levels of pollution, according to the website.

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